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Too many property investors are paying too much in taxes because they are not claiming for all their allowable costs.

There are two reasons why landlords overpay in taxes:

1) they lose their property receipts and, therefore, don’t (or are unable to) claim the expense

2) they are not aware that they can offset certain costs as genuine expenditure

Losing Receipts!

Not keeping receipts, or misplacing them, is just like saying to the taxman “I want to pay you higher taxes”!

In many cases landlords can give up a significant chunk of their profits to the taxman just by losing their receipts.

Don’t forget, if you don’t have a receipt then you can’t claim for expense that you have incurred. This is because you have no proof of having actually incurred the expenditure in the first place.

The receipts that most frequently get lost are the ones that tend to be of a smaller value.

However, if you keep on losing these receipts, by the end of the year they will probably equate to a sizeable amount of expenditure that you are not deducting from your profits.

In too many cases this can be the difference between paying too much in taxes and legitimately avoiding paying any tax at all.

I always say to investors that whenever they incur an expense, they should ask the question “has the expense been incurred for the property business?”

If the answer is ‘YES’ then make sure that you keep the receipt and enter the expense in to your property management software package.

Every good property management software solution will allow you to track all of your property expenses, meaning that you will be able to see all of the expenses that you have incurred for your property business by just a click of a button.

Therefore, using such a software solution will help you to get better organised as it will visually encourage you keep all receipts.

Is it Really a Business Expense?

Next we come to the issue of knowing whether you can genuinely treat the expenditure as a business expense and deduct it from your property profits.

Enter, stage left, your accountant!

If you are unsure whether you can claim the cost then simply print off your expenditure list from your landlord software, sit down with your accountant and go through the expenses. He will be able to confirm which expenses you can and cannot claim.

Also, any good landlord software package will be able to automatically estimate what your tax liability will be. This is because if you are using the software package correctly then you will not just be logging all your property receipts but also entering your property rental income as well.

Therefore, producing such a report will save you a significant amount of time in accountancy fees.

Get better organised today! At Property Portfolio Software we provide property management software and landlord software solutions that are designed to help landlords and Property Managers.

These unique property software solutions cover all the challenges that landlords face and are guaranteed to help you boost your property cash flow.